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TMI Blog2008 (5) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) or 291(2)( ii) or 291(4) are to be considered. Subject to the aforesaid directions and observations, this report is accordingly, disposed of in the above terms. - OFFICIAL LIQUIDATOR REPORT NO. 22 OF 2008 - - - Dated:- 8-5-2008 - K.A. PUJ, J. Ms. Amee Yajnik and Mrugesh Jain for the Applicant. Sandeep Singhi, Shalin N. Mehta, Ms. Nalini S. Lodha and Hemang M. Shah for the Respondent. JUDGMENT 1. The Official Liquidator has filed this report seeking permission of this Court to deduct an amount of Rs. 3,54,90,803 from the liquidated assets of the 103 Companies (In Liquidation) as per Annexure A to this report, in terms of rule 291 of the Companies (Court) Rules, 1959 and to pay the said amount to the public account of India by depositing a cheque of the said amount for crediting to the Central Government s account in Reserve Bank of India through designated Bank of Ministry of Corporate Affairs, Punjab National Bank, Ashram Road, Ahmedabad. The Official Liquidator has also sought the permission to encash the fixed deposit receipts for making payment of this amount to the Central Government as per Annexure A to this report. 2. Since the permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidend payment", the amount paid/disbursed has been mentioned and again under the head "Sale proceeds" amount of sale proceeds is mentioned. It is the say of the Official Liquidator that Central Government fees are to be collected under rule 291(2)( i ), 291(2)( ii ) and 291(4). The grievance of the Secured Creditors, however, was that it was not clear from the details furnished by the Official Liquidator as to what is meant by inspection charges and FDR interest or dividend paid. In absence of the requisite details, it was not possible for the Secured Creditors to make their submissions. Accordingly, the Official Liquidator was directed to furnish the said details. 4 . Pursuant to the order passed by this Court on 18-3-2008, the Official Liquidator has filed his report on 3-4-2008 stating therein that the rule 291(2)( i ) requires the Official Liquidator to pay to the Central Government its fee at the rate prescribed therein. Upon the total assets including produce of calls on contributories, interest on investments and rents on their properties realized or brought to credit by the Official Liquidator ( sic ). Under this rule, the Central Government fees are required to be pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial Liquidator has stated in his report that as and when orders are passed by this Court in making payment to Creditors of a particular Company (In Liquidation), the Official Liquidator is required in terms of rule 290 of Companies (Court) Rules, 1959 to open a separate dividend account for each Company by depositing therein the total amount required to be distributed amongst Creditors as dividend, upon each declaration or order of this Court for payment of Creditors and the Official Liquidator is required to make payment of Creditors out of such separate dividend account opened by him towards each declaration/distribution as ordered by this Court. The Official Liquidator is, therefore, issues cheques in the name of each individual Creditor including workman and others as required under rule 290. Clause ( ii ) of sub-rule (2) of rule 291 requires that Central Government s fee at half the rate prescribed in rule 291(2)( i ) is required to be paid to Central Government for all distributions made by him by way of dividend paid to Creditors. He has, therefore, stated in his report that the Central Government at the said rate has been calculated by him which is reflected in the calcul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts as a Liquidator of the Company. The amount sought to be collected as a fee is required to be credited to the Central Government, but the fee is in the context of a winding up proceedings and where the Official Liquidator acts as a Provisional Liquidator or as Liquidator of the Company being wound up. Thus, the fee is in the context of the winding up proceedings and not in the limited context of the services rendered. The liability for payment falls on those persons who actually are benefited from the winding up proceedings and to the extent such persons derive benefit. He has further submitted that the conjoint reading of section 451(2) and rule 291 makes it amply clear that the Official Liquidator is entitled to collect fees at the rate prescribed under rule 291 of the Rules. In support of his submissions, he relied on the decision of this Court in the case of Textile Labour Union v. O.L. of Rajprakash Mills Ltd. [Company Application No. 164 of 2001 decided on 13-10-2005] wherein it is held that merely because the secured creditors have remained outside the winding proceedings, is no ground for repudiating or avoiding the liability to pay the fees to the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Based on the aforesaid statutory provisions contained in the Act as well as the Rules and the decisions of this Court as well as Karnataka High Court, Mr. Shah strongly urged that the prayer made by the Official Liquidator in the present report is required to be granted. 13. Mr. Sandeep Singhi, learned advocate appearing for the Secured Creditor, on the other hand, has submitted that one has to strictly construe the provisions of the Rule. Under rule 291(2)( i ) the fees to the Central Government are to be paid from the particular year s collection. From the total assets, including produce of calls on contributories, interest on investments and rents from properties, realized or brought to credit by the Official Liquidator. He has further submitted that under this sub-clause, Official Liquidator cannot charge fees on the interest on the investments of sale proceeds made by the Official Liquidator. He has further submitted that under sub-rule (2) of rule 291, the Official Liquidator is entitled to collect fees only on the total amount distributed in dividend or paid to contributories, Preferential Creditors and Debenture Holders. Secured Creditors having pari passu charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing up order is made and the Official Liquidator acts as liquidator of a company, ( i )Upon the total assets, including produce of calls on contributories, interest on investments and rents from properties, realized or brought to credit by the Official Liquidator, after deducting sums on which fees are chargeable under clauses (3) and (4) below and the amount spent out of the money received in carrying on the business of the company, upon each year s collections. On the first Rs. 10,000 or fraction thereof 3% On the next Rs. 40,000 or fraction thereof 2% On the next Rs. 50,000 or fraction thereof 1% Above Rs. 1,00,000 3/4% ( ii )On the total amount distributed in dividend or paid to contributories, preferential creditors, and debenture holders by the Official Liquidator, half the above percentages. ( a )In computing the collections of each year, the year shall be taken as ending with 31st day of March. ( b )The said fees shall include the Official Liquidator s services as Provisional Liquidator and shall be subject to clauses (8) and (9) hereunder. (3) Where the Official Liquidator collects, calls or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the credit by the Official Liquidator. If the assets of the Company in liquidation are realized in a particular year, in that year, the Official Liquidator is entitled to charge fees. Similarly, if the Official Liquidator has received certain calls from the contributories or if the investments are received at the time when he took over the charge of the assets of the Company and from that investment, interest is earned, on that interest amount, the Official Liquidator is entitled to charge fees and the properties of the Company which are let out and from the said properties, rents are collected, on that rent also, he is entitled to charge fees. However, when the assets of the Company are sold, amount is realized and instead of disbursing the said amount amongst the Secured Creditors under section 529, 529A or 530 of the Companies Act, 1956, such amount is invested and on that investment, if interest is earned, the Official Liquidator cannot charge fees on such interest amount. This amount ultimately belongs to the Creditors and workers and it is to be meant for distribution. Because of the pending litigations, the amount is not distributed immediately and because of delayed dist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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